The Progressive


A project of Common Dreams

For Immediate Release

David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Mark Almberg, PNHP, (312) 782-6006,

Projections of Savings from Health IT are Baseless, Harvard Researchers Say

National survey of U.S. hospitals shows information technology has yielded neither administrative efficiencies nor cost savings


The increased computerization in U.S. hospitals hasn't made them
cheaper or more efficient, Harvard researchers say, although it may
have modestly improved the quality of care for heart attacks.

The findings, published in today's [Friday's] online edition of The
American Journal of Medicine, contradict claims by President Obama and
many lawmakers that health information technology (health IT),
including electronic medical records, will save billions and help make
reform affordable.

"Our study finds that hospital computerization hasn't saved a dime,
nor has it improved administrative efficiency," said lead author Dr.
David Himmelstein, associate professor at Harvard Medical School and
former director of clinical computing at Cambridge Hospital in
Massachusetts. "Claims that health IT will slash costs and help pay for
the reforms being debated in Congress are wishful thinking."

The study uses data from the most extensive survey ever undertaken
of hospital computerization. Data from approximately 4,000 hospitals
for the years 2003 to 2007, including those on a list of the "100 Most
Wired," were analyzed for evidence of increased quality, cost savings
or improvements in administrative efficiency.

The data came from the authoritative Healthcare Information and
Management Systems Society (HIMSS) Analytics annual survey of hospital
computerization; Medicare Cost Reports that virtually all hospitals
submit annually to the Centers for Medicare and Medicaid Services
(CMS); and the 2008 Dartmouth Health Atlas, which compiles CMS data on
costs and quality of care.

Although the researchers found that U.S. hospitals increased their
computerization between 2003 and 2007, they found no indication that
health IT lowered costs or streamlined administration, even in the
"most wired" institutions. While U.S. hospital administrative costs
increased slightly, from 24.4 percent in 2003 to 24.9 percent in 2007,
hospitals that computerized most rapidly actually had the largest
increases in administrative costs. (By way of comparison, older studies
have estimated administrative costs in Canadian hospitals at 12.9

The study found no evidence of lagged effects, e.g. lower costs in
2007 resulting from information technology introduced in 2003.

Modest quality gains were noted in the treatment of heart attacks
(acute myocardial infarction) in more-computerized hospitals, but even
these small improvements may merely represent better documentation
rather than actual gains to patients.

Himmelstein said a report from the Congressional Budget Office in
2008 signed by Peter Orszag, now Obama's budget director, expressed
skepticism about claims by the RAND Corp. and others that health IT
could generate $80 billion annually in savings.

"Part of the CBO's skepticism was based on the limited information
available to the RAND study and similar studies," Himmelstein said.
"But this new, detailed, national survey of diverse hospitals shows
such doubts are well-founded. Information technology can't rescue us
from our national health care crisis."

Dr. Steffie Woolhandler, professor of medicine at Harvard and study
co-author, said several factors may explain why health IT has failed to
reduce administrative costs.

"Any savings may have been offset by the costs of purchasing and
running new computer systems," she said. "In addition, most software is
designed around the accounting and billing needs of hospitals, not the
clinical side."

She noted that a computer success story in recent years has been at
the Veterans Administration, where global budgets eliminate most
billing and internal cost accounting, allowing physicians to focus
instead on delivering care.

"The VA system now has our nation's highest quality and patient
approval ratings," Woolhandler said. "Congress should take note: to get
the most benefit from our health care dollars and from health IT, we
should adopt a single-payer, Medicare-for-all program. Nothing short of
that will allow us to reap the full potential of computerization or to
provide comprehensive, quality and affordable care to all."

"Hospital computing and the costs and quality of care: a
national study," David U. Himmelstein, M.D., Adam Wright, Ph.D., and
Steffie Woolhandler, M.D., M.P.H., The American Journal of Medicine, Nov. 20, 2009 (online).

Physicians for a National Health Program is a single issue organization advocating a universal, comprehensive single-payer national health program. PNHP has more than 21,000 members and chapters across the United States.